Amicus Curiae Brief — Concrete Pipe & Products of Cal., Inc. v. Construction Laborers Pension Trust for Southern Cal.

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No. 91-904 .. , ERs

IN THE

Supreme Court of the Muited States

OCTOBER TERM, 1992

CONCRETE PIPE AND PRODUCTS OF CALIFORNIA, INC.,

Petitioner,

Vv.

CONSTRUCTION LABORERS PENSION TRUST FOR

SOUTHERN CALIFORNIA,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF OF AMICUS CURIAE

AMERICAN ACADEMY OF ACTUARIES

IN SUPPORT OF RESPONDENT

LAUREN M. BLooM

AMERICAN ACADEMY OF ACTUARIES

1720 Eye Street, N.W.

Washington, D.C. 20006

(202) 223-8196

Counsel of Record for the

American Academy of Actuaries

WILSON - Epes Printinc Co., Inc. - 789-0096 - WASHINGTON, D.C. 20001

BEST AVAILABLE COPY

TABLE OF CONTENTS

Page

STATEMENT OF INTEREST OF AMICUS CU-

SUMMARY OF ARGUMENT ......00020020 4

EERE = REE ver ne 5

I. THE ACTUARIAL PROFESSION REQUIRES

ITS MEMBERS TO PERFORM WORK IN A

COMPETENT, UNBIASED AND ETHICAL

LE a pdeniinbeatiintaabetes 6

Il. ACTUARIES HAVE SPECIAL EXPERTISE,

AND ARE WELL QUALIFIED TO RENDER

ig FS ES ye enn CENEEEE 10

Ill. MPPAA’S EVIDENTIARY PRESUMPTIONS

I a siceernaeceenenpeonavecetonionteooee 12

EEEEITIIEETT cususrisndtubsssniassnabiieconsincebsnstncsctunsinmeenttcainieedses 14

TABLE OF AUTHORITIES

Cases: Page

Supreme Court Cases:

Connolly v. Povsion Benefit Guaranty Corporation,

ATH U.S. 211 (1986) 5

Nachman Corporation v. Pension Benefit Guaranty

Corporation, 446 U.S, 359 (1980) 5

Northern Pipeline Construction Co, v. Marathon

Pipe Line Co, 458 U.S. 50 (1982) ee Tes Ao 13

Pension Benefit Guaranty Corporation wv. R. A.

Gray & Co., 467 U.S. 717 (1984) ....., 10, 11

Schweiker v. MeClure, 456 U.S. 188 (1982). 9

United States v. Gaincy, 380 U.S. 63 (1965) 13

United States v. Will, 449 U.S, 200 (1980) wy. 10

Usery v. Turner Elkhorn Mining Co., 428 U.S. 1

(19776) ..........020.2-2000:000rnesnnsesessnnuenssessaneeineennnannnnn

Circuit Court Cases:

Board of Trustees, Michigan United Foods and

Commercial Workers Unions v. Eberhart Foods,

Ine., 831 F.2d 1258 (6th Cir. 1987) soséissadgandle 12

Board of Trustees of the Western Conference of

Tcamsters Pension Trust Fund v. Thompson

Building Materials, Ine., 749 F.2d 1396 (9th

Cir. 1984), cert. denied, A71 U.S. 1054 (1985). 11

Combs v. Classic Coal Corporation, 931 F.2d 96

(D.C. Cir. 1991) a

Huber v. Casablanca Industries, Tne., 916 F.2d 85

(3rd Cir. 1990) - censaietndaie

Keith Fulton & Sons v. New England Teamsters

and Trucking Industry Pension Fund, Inc., 762

F.2d 11987 (lat Cig, BED .nccccsccccsssecueeee 9

Peick v. Pension Benefit Guaranty Corporation,

724 F.2d 1247 (7th Cir. 1983), cert. denied, 469

UB. 1960 (10BG) .........cccecccercoccecessnueuneeneeeenneeee 11

United Retail & Wholesale Employees Teamsters

Union Local No. 115 Pension Plan v. Yahn &

McDonnell, Inc., 787 F.2d 128 (3rd Cir. 1986),

att'd without opinion by a divided Court, 481

U.S. 735 (1987) occeceusenes eovesmeasiaanaaiee 8-9

iii

TABLE OF AUTHORITIES-——Continued

District Court Cases:

Dorvv's Transportation, Ine. v. LAM. National

Pension Fund Benefit Plan A, 578 F. Supp. 1222

(D.D.C. 1984), aff'd without opinion, 753 F.2d

166 (D.C. Cir, 1985)

Lahorers Pension Trust for Southern California v.

Cen-Vi-Ro Conercte Pipe and Products, Civ. Ae-

tion Nos. 82-5184 HLH and 88-5759 HLH (C.D.

Cal. July 3, 1989)

Statutes:

Employee Retirement Income Security Act, 29

U.S.C. & LLOL ef seq.

Multiemployer Pension Plan Amendments Act, 29

U.S.C. § 1381 ef seq.

29 U.S.C. § 1381

29 U.S.C. £1291

29 U.S.C. § 13923 (a)

29 U.S.C. 8 1401 (a) (3)

29 U.S.C. § 1401 (b) (2)

Legislative History:

H.R. Rep. No, 869, Pt. I, 96th Cong., 2d Sess.,

1980 U.S. Code Cong. & Admin. News 2918

Pension Plan Termination Insurance Issues: Hear-

ing Before the Subcommittee on Oversight of the

Committee on Ways and Means House of Repre-

sentatives, 95th Cong., 2nd Sess. 22 (1978)

(statement of Matthew M. Lind) na

S. 1076, The Multiemployer Pension Plan Amend-

ments Act of 1920: Summary and Analysis of

Consideration, 98th Cong., 2nd Seas. 21 (1980)

Arbitration Decisions:

Carnation Co., Tne. and Central States Pension

Fund, 9 E.B.C. (BNA) 1409 (1988) (Nagle,

Arb.)

Casahlaneca Industries, Ine. and UF C.W. Local 23-

Giant Eagle Pension Fund, 7 E.B.C. (BNA)

2705 (1986) (Jaffe, Arb.)

Paye

12

19-11

12

12-13

iv

TABLE OF AUTHORITIES—Continued

Classie Coal Corp. v. U.M.W. 1950 and 1974 Pen-

sion Plans, 5 E.B.C. (BNA) 1449 (1984) (Nagle,

Arb.) . SR

Palmer Coking Coal Co. end v M. W. 1950 end 1974

Pension Plans, 5 E.B.C. (BNA) 2369 (1984)

(Gordon, Arb.) =

Perkins Trucking Co. and Local 807 Pension Fund,

4 E.B.C. (BNA) 1489 (1983) (O'Loughlin,

Arb.)

Siqmond Cohn Corp. and Machinists District No.

15 Pension Fund, 14 E.B.C. (BNA) 1031 (1991)

(Sands, Arb.)

Miscellaneous:

Actuarial Standard of Practice No. 4, “Recom-

mendations for Measuring Pension Obligations,”

published by Actuarial Standards Board (1989)

Actuarial Standard of Practice No. 12, “Concern-

ing Risk Classification,” published by Actuarial

Standards Board (1989) ..........

Actuarial Standard of Practice No. 17, “Expert

Testimony by Actuaries,” published by Actuarial

Standards Board (1991) ..........

Code of Professional Conduct of the American

Academy of Actuaries (1992) |

Interpretative Opinion No. 3, “Professional Com-

munications of Actuaries,” republished by the

Actuarial Standards Board (1992)

Interpretative Opinion No. 4, “Actuarial Principles

and Practices,” republished by the Actuarial

Standards Board (1992) Seiaiabain

Page

13

13

13

12

6-7

IN THE

Supreme Court of the United States

OcToBER TERM, 1992

No. 91-904

CONCRETE PIPE AND PropuCcTS OF CALIFORNIA, INC.,

Petitioner,

Vv.

CONSTRUCTION LABORERS PENSION TRUST FOR

SOUTHERN CALIFORNIA,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF OF AMICUS CURIAE

AMERICAN ACADEMY OF ACTUARIES

IN SUPPORT OF RESPONDENT

The American Academy of Actuaries submits this brief

as amicus curiae, pursuant to Rule 37 of the Rules of the

Supreme Court of the United States, in support of re-

spondent in No. 91-904, having obtained the written con-

sent of both the petitioner and the respondent to do so.

Said written consent accompanies this brief.

2

STATEMENT OF INTEREST OF AMICUS CURIAE

The American Academy of Actuaries (the “Academy”!

is a nonprofit professional association established in 1965

to provide a commen membership organization for ae-

tuaries of a!l specialties practicing within the United

States, and to seek greater public recognition for the ac-

tuarial profession. To become an Academy member, an

actuary must satisfy rigorous education and experience

requirements. Membership in the Academy is a require-

ment in many states to perform certain types of actuarial!

work. The Academy’s primary activities include liaison

with federal and state governments, relations with other

professions, dissemination of public information about

the actuarial profession, and the promulgation and imple- -

mentation of standards of professional conduct, practice

and qualification. The Academy’s membership exceeds

10,000 actuaries nationwide.

The Academy maintains an Actuarial Standards Board

(the “ASB”), an independent, quasi-legis!ative body, to

develop and adopt Standards of Practice for the actuarial

profession. Actuaries who are members of the Academy

and other professional associations are required to comply

with the ASB’s practice standards, which are detailed

and serve as a guide for sound actuarial! practice. The

Academy has a!so adopted a Code of Professional Conduct

to govern the professional ethics of its members.'

The Standards of Practice and the Code of Professiona!

Conduct are administered by another independent body,

the Actuarial Board for Counseling and Discipline ‘the

1 Prior to the adoption of the Code, the Academy maintained

Guides to Professional Conduct to govern the ethical conduct of its

members ; the Guides were supplemented by Interpretative Opinions.

Interpretative Opinions 3 and 4 were recently republished by the

ASB, and are incorporated by reference in several of the ASB’s

Standards of Practice. Copies of relevant Standards of Practice,

the Code of Professional! Conduct, and Interpretative Opinions °

and 4 are appended hereto, and have been lodged with the Court

with the consent of the petitioner and respondent.

3

“ABCD"). The ABCD’s purpose is to maintain a high

quality of actuarial practice by investigating complaints

against actuaries, and counseling actuaries concerning the

app ication of standards of practice, conduct and qualifi-

cation to their professional activities. The Academy and

four other United States actuarial organizations have

delegated to the ABCD responsibility to investigate com-

plaints against their members, and to counsel their mem-

bers in sound actuarial practice and conduct. The ABCD

is also authorized to recommend to those organizations

that publie discipline in the form of reprimand, suspen-

sion or expulsion from membership be taken against ac-

tuaries where serious violations have occurred,

The Academy has numerous members who provide

actuarial services to multiemployer pension plans, These

members furnish the plans with expert valuations from

which, among other things, the withdrawal liability of

employers may be determined. The Academy anticipates

that the Court’s decision in this case may have a sig-

nificant effect upon the professional practice of these

actuaries. Moreover, as an organization representing

actuaries, the Academy is uniquely positioned to advise

the Court of the actuarial profession's efforts to insure

that its members observe high standards of practice and

conduct, standards which petitioner's arguments seem to

undervalue. Indeed, the allegations made by petitioner

Concrete Pipe and Products of California, Inc. (“CPP”)

impugn both the integrity of the actuarial profession and

the level of expertise required to render actuarial advice,

suggesting that the expert opinions of actuaries serving

multiemployer pension plans should not be accorded sig-

nificant evidentiary weight. The Academy disagrees with

CI’P’s allegations and, accordingly, has a substantial in-

terest in the outcome of this proceeding.’

2 The Academy takes no position as to the second issue raised in

proceeding, namely, whether the provisions of the Multi-Employver

Pension Plan Amendments Act were unconstitutional as applied to

CPP in this particular case.

4

SUMMARY OF ARGUMENT

The evidentiary assumptions created by the Multiem-

ployer Pension Plan Amendments Act (“MPPAA”), 29

U.S.C. § 1381 et seq., are fully consistent with Congress’

purpose in adopting the Employee Retirement Income

Security Act (“ERISA”), 29 U.S.C. § 1101 et seg. Con-

trary to CPP’s assertions, the presumptions do not deprive

withdrawing employers of an impartial decision-maker,

because the actuaries whose valuations serve as the basis

for withdrawal assessments are required by the standards

of their profession to render their valuation opinions in

an unbiased, ethical manner. Further, in the rare case

where an actuary departs from the standards of practice

and conduct required by the profession, the review proce-

dures established by MPPAA provide an appropriate

means to insure that employers will not be required to

pay unreasonable withdrawal assessments.

Actuaries have been recognized by the courts as expert

professionals who are well-equipped to make the complex

calculations necessary to achieve reasonable withdrawal

assessments. Congress’ decision to accord special weight

to actuaries’ expert views is within its authority to estab-

lish evidentiary rules, and is a reasonable means to

achieve its objectives under ERISA. The Academy there-

fore requests that the decision of the court below uphold-

ing the constitutionality of the evidentiary presumptions

established by MPPAA be affirmed.

5

ARGUMENT

ERISA was enacted, among other things, to prevent

employees from suffering the devastating loss of their

pension benefits through unanticipated plan termination.

Nachman Corporation v. Pension Benefit Guaranty Cor-

poration, 446 U.S, 359, 374 (1980). However, ERISA’s

original termination liability provisions created an incen-

tive for employers to withdraw from a multi-employer

pension plan at the first sign of financial trouble, rather

than be saddled with heavy liability to the Pension Bene-

fit Guaranty Corporation if the plan ultimately failed.

Connolly v. Pension Benefit Guaranty Corporation, 475

U.S. 211, 216 (1986), citing Pension Plan Termination

Insurance Issues: Hearing Before the Subcommittee on

Oversight of the Committee on Ways and Means House

of Representatives, 95th Cong., 2nd Sess. 22 (1978)

(statement of Matthew M. Lind). Congress enacted

MPPAA “as part of an overall statutory scheme to safe-

guard the solvency of [multiemployer] pension plans.”

Connolly, supra at 228.

MPPAA requires employers, upon withdrawing from

plans, to pay “a fixed and certain debt to the pension

plan.” Pension Benefit Guaranty Corporation v. R. A.

Gray & Co., 467 U.S. 717, 725 (1984), quoting 29 U.S.C.

§§ 1381, 1391 (emphasis added). The employer's with-

drawal liability is determined by the plan trustees, based

upon calculations made by the plan’s actuary. If the em-

ployer challenges the assessment in arbitration, the calcu-

lations are presumed by the arbitrator to be correct unless

the employer “shows by a preponderance of the evidence

that the determination was unreasonable in the aggregate

or clearly erroneous.” 29 U.S.C. § 1401/a)(3) (1982).

The arbitrator’s findings of fact are subject to a similar

rebuttable presumption of validity if either party brings

suit to enforce, vacate or modify the arbitrator's award.

29 U.S.C, §1401(b) (2) (1982).

6

I. THE ACTUARIAL PROFESSION REQUIRES ITS

MEMBERS TO PERFORM WORK IN A COMPE-

TENT, UNBIASED AND ETHICAL MANNER

CPP’s claim that it was denied access to an impartial

decision-maker rests entirely upon its assertion that the

presumptions established by MPPAA cannot effectively be

rebutted. See generally Brief on the Merits by Petitioner

(July 10, 1992) at 43-49. However, CPP is mistaken in

its assertion that “there is no objective yardstick” to

measure the fairness of the actuary’s assumptions. Peti-

tion for Certiorari (December 3, 1991) at 13. MPPAA

requires actuarial calculations to be reasonable in the

aggregate, “taking into account the experience of the plan

and reasonable expectations.” The calculations must also

“offer the actuary’s best estimate of anticipated experi-

ence under the plan.” 29 U.S.C. $ 1393(a). This provi-

sion requires actuaries to exercise their expert judgment

in the selection of actuarial assumptions. It does not

allow them to make unreasonable calculations, or to

ignore a plan’s history or likely future experience.

The ASB has adopted two Standards of Practice that

offer specific guidance to pension actuaries. Actuarial

Standard of Practice No. 4, “Recommendations for Meas-

uring Pension Obligations,” contains detailed instructions

for measuring and communicating pension obligations.

See generally App. A-1-A-21.° Actuarial Standard of

Practice No. 12, “Concerning Risk Classification,” sets

forth specific “guidelines for actuaries in designing, using

and updating risk classification systems,” to insure fair-

ness and “soundness of the financial security system.”

See App. A-24- A-25, $$ 1.1., 5. The ASB has also adopted

Actuarial Standard of Practice No. 17, “Expert Testi-

mony by Actuaries,” which applies to testimony concern-

ing “|w]ithdrawal liability assessments under multiem-

‘8 The ASB is also developing a Standard to provide actuaries with

detailed guidance on the selection of economic assumptions for

measuring pension plan obligations.

7

ployer plans.” See App. A-35, $4.1(J). That Standard

specifically states that a conflict of interest exists

“whenever the actuary’s objectivity, or duty owed to a

client or employer, is impaired by competing interests,”

and requires the actuary to disclose the conflict “to all

interested parties.” See App. A-36, § 5.2. The Standard

further provides that “|{t]he actuary’s fundamental obli-

gation when giving expert testimony is to provide the

forum with a valid actuarial opinion.” See App. A-36,

$ 5.5 (emphasis added).

Departure from these standards could bring an actuary

before the ABCD, and could lead to counseling or, if the

actuary’s failure to comply with the standards was suffi-

ciently severe, to public reprimand, suspension or expul-

sion from membership. Failure to comply with the stand-

ards might also constitute substantial evidence in arbitra-

tion or litigation that the plan actuary assumptions were

not, in the aggregate, reasonable. Cf. 29 U.S.C. § 1393(a).

Similarly, the Code of Professional Conduct requires

actuaries to “perform professional services with integrity,

skill and care,” and to refuse to provide services if the

actuary “believes they may be used to violate or evade

the law.” See App. A-38, A-39, Precepts 2, 9. An actuary

who deliberately distorted a withdrawal liability calcula-

tion in order to inflate the employer’s liability arguably

should anticipate that the calculation would be used to

evade the “reasonableness” requirements of MPPAA, in

violation of Precept 9 of the Code. Such a biased caleula-

tion would not be rendered with the integrity that Pre-

cept 2 of the Code requires. Again, an actuary who failed

to satisfy these requirements would be subject to counsel-

ing, public reprimand, suspension or expulsion from the

actuary’s professional! organizations.

The Interpretative Opinions that were recently repub-

lished by the ASB, and that are incorporated by reference

into several of the Standards of Practice, also require ac-

tuaries to exercise their professional judgment in an in-

8

dependent and ethical manner. Interpretative Opinion 4

requires al] actuarial assumptions and methods to be “se-

lected and applied with integrity, informed judgment and

perspective in relation to the circumstances applicable to

the particular situation and the purpose for which the

results are intended.” See App. A-44. Further, in an in-

stance where a client or employer requests a service that

conflicts with an actuary’s professional judgment, Inter-

pretative Opinion 3 requires the actuary to “advise the

client or employer of the conflict and. . . include appro-

priate qualifications and disclosures in any related actu-

arial communications.” See App. A-43. An employer,

seeing these disclosures and qualifications, could use them

in arbitration to challenge the reasonableness of the with-

drawal assessment.

Thus, actuaries practicing under MPPAA are required

by the standards and tenets of their profession to per-

form their work in a comptent, unbiased and ethical

manner. An actuary is also required to disclose any de-

parture from the actuary’s expert judgment, or conflict

of interest, in a manner that would give an employer

opportunity to challenge the reasonableness of the with-

drawal liability caleulations.*

For this reason, CPP’s general reliance upon United

Retail & Wholesale Employees Teamsters Union Local

No. 115 Pension Plan v. Yahn & McDonnell, Inc., 787

*A plan might employ an actuary whose education or experience

were insufficient to meet the membership requirements of the

Academy or other actuarial membership organizations that have

adopted the Standards and Code. Such an actuary would be beyond

the jurisdiction of the ABCD. However, that actuary’s credentials

would, presumably, be considered as a factor when weighing the

actuary’s testimony, just as the respective credentials of CPP’s

actuary and the plan actuary were considered by the arbitrator and

district court in this case. See Construction Laborers Pension Trust

for Southern California v. Cen-Vi-Ro Concrete Pipe and Products,

Civ. Action Nos. 82-5184 HLH and 88-5759 HLH (CD. Cal. July 3,

1989), Joint Appendix, Vol. II at 423.

9

F.2d 128 (3rd Cir. 1986), aff'd without opinion by a

divided Court, 481 U.S. 735 (1987), is misplaced. In

Yahn, the court asserted that withdrawing employers

are deprived of an unbiased decision maker because the

plan trustees are fiduciaries of the plan and, therefore,

inherently biased in favor of the plan and its beneficiaries.

787 F.2d at 139-41. The Yahn court’s assertions of

trustee bias are no more than “generalized assumptions

of possible interest” based solely upon the institutional

role assigned to the trustee by MPPA. As this Court has

noted, “|sjuch assertions require substantiation before

they can provide a foundation for invalidating an Act of

Congress.” Schweiker v. McClure, 456 U.S. 188, 196 n.

10 (1982).

Moreover, the statutory obligations of the trustees will

not necessarily result in unfairness to employers. As the

First Circuit Court of Appeals has recognized :

| Plan trustees’] knowledge that they must act uni-

formly over time, treating like cases alike, signifi-

cantly cabins their discretion, for it tends to create a

uniform employer interest in favor of fair rules and,

given the need to maintain employer membership and

satisfaction, it entails a trustee obligation of fair

treatment to withdrawing employers as part of their

obligation to the fund.

Keith Fulton & Sons v. New England Teamsters and

Trucking Industry Pension Fund, Inc., 762 F.2d 1137,

1141 (1st Cir. 1987).

Even if plan trustees may be assumed to be unfairly

biased as stated in Yahn, however, actuaries working for

plans are prohibited by the tenets of their profession from

indulging in such bias. Further, in the rare instance

where an actuary fails to exercise impartial professional

judgment in making MPPAA calculations, the review

process established by MPPAA should suffice to reveal the

actuary’s bias. For example, in Huber v. Casablanca In-

dustries, Inc., 916 F.2d 85 3rd Cir. 1990), the Third

10

Circuit Court of Appeals reiterated its assumption that

MPPAA trustees are inherently biased and extended that

assumption to plan actuaries, arguing that, because the

plan pays the actuary, the trustees may exert undue in-

fluence over the actuary. 916 F.2d at 93, citing United

States v. Will, 449 U.S. 200, 217-19 (1980). However,

both the arbitrator and the court in Huber were able to

determine from minutes of a Board of Trustees meeting

that the assumptions and methods used in the actuary’s-

valuation were not the product of impartial professional

expertise, but appeared to have been influenced by pres-

sure from the plan trustees to inflate employer with-

drawal liability. 916 F.2d at 90, 93. Huber demonstrates

that the MPPAA review procedures should be sufficient

to protect employers in the exceptional case where an ac-

tuary yields to undue influence.

Il. ACTUARIES HAVE SPECIAL EXPERTISE, AND

ARE WELL QUALIFIED TO RENDER MPPAA

VALUATIONS

As this Court previously observed when deliberating the

constitutionality of MPPAA, Congress was not required,

when drafting the statute, to select the best possible

method for achieving its objectives, but merely to enact

legislation that was rationally related to Congress’ legis-

lative purposes. R.A. Gray & Co., supra, 467 U.S. at

729-30, citing Usery v. Turner Elkhorn Mining Co., 428

U.S. 1, 15 (1976) (additional citations omitted!. MPPAA’s

evidentiary presumptions represent Congress’ recognition

that actuaries possess special expertise, and are uniquely

qualified to render the calculations upon which reasonable

withdrawal assessments may be based.

Congress included in MPPAA the rebuttable presump-

tions that are at issue here “to ensure the enforceability

of employer liability. In the absence of these presump-

tions, employers could effectively nullify their obligation

by refusing to pay and forcing the plan sponsor to prove

every element involved in making an actuarial determina-

11

tion.” H.R. Rep. No. 869, Pt. I, 96th Cong., 2d Session,

1, 86, 1980 U.S. Code Cong. & Admin. News 2918, 2954.

Without the presumptions, withdrawing employers might

be expected to challenge every withdrawal liability assess-

ment, and not merely those that are unreasonable or er-

roneous. These constant challenges would waste plan as-

sets by forcing trustees to defend complex actuarial cal-

culations, and would create ongoing doubt that the “fixed

and certain debt” assessed by MPPAA would be paid by

withdrawing employers, thereby complicating the ac-

tuary’s efforts to project the plan’s future assets. Cf.

rom supra, 476 U.S. at 725, quoting 29 U.S.C. §§ 1381,

i391.

As the courts have recognized, “|a| fund’s actuarial

soundness at any specific time depends on a complex in-

teraction of many factors including anticipated life spans

of beneficiaries, estimated appreciation or depreciation of

fund assets, and the likelihood that the contribution base

will remain stable.” Board of Trustees of the Western

Conference of Teamster Pension Trust Fund v. Thomp-

son Building Materials, Inc., 749 F.2d 1396, 1402 (9th

Cir. 1984), cert. denied, 471 U.S. 1054 (1985), citing

Peick v. Pension Benefit Guaranty Corporation, 724 F.2d

1247, 1267 (7th Cir. 1983), cert. denied, 469 U.S. 1259

(1984). Given that legitimate differences of opinion may

exist as to actuarial assumptions and methods, Congress

“created the statutory presumption in favor of with-

drawal determinations expressly to forestall endless dis-

putes ‘over technical actuarial matters with respect to

which there are often several equally “correct ap-

proaches.” ’” Combs v. Classic Coal Corporation, 931

F.2d 96, 99-100 (D.C. Cir. 1991), quoting S. 1076, The

Multiemployer Pension Plan Amendments Act of 1980:

Summary and Analysis of Consideration, 98th Cong., 2nd

Sess. 21 (1980). We know of no class of pension profes-

sionals that is better qualified than actuaries to assess the

complex, interrelated factors that determine a plan’s ac-

tuarial soundness, and to make the valuations from which

12

withdrawal assessments are calculated. MPPAA’s with-

drawal liabiilty procedures insure that “{e]omplex tech-

nical determinations of the amount of liability are allo-

cated to those with the greatest expertise. Plans are

protected under |MPPAA] from inconsistent judicial or

arbitrator holdings by a range of acceptable actuarial

methods.” Dorn’s Transportation, Inc. v. 1.A.M. National

Pension Fund Benefit Plan A, 578 F.Supp. 1222, 1238

(D.D.C. 1984), aff'd without opinion, 753 F.2d 166 (D.C.

Cir. 1985); see also Combs, supra, 931 F.2d at 100.

MPPAA does not require an actuary “to choose the figure

that the court would choose as the most reasonable... .

Rather, the only requirement is that in every case the

actuarial determination will fall within the range of rea-

sonableness.” Loard of Trustees, Michigan United Foods

and Commercial Workers Unions v. Eberhart Foods, Ine.,

831 F.2d 1258, 1261 (6th Cir. 1987). This approach

permits a plan actuary to exercise professional judgment

in selection of actuarial assumptions and methods, while

protecting the employer from being forced to pay an un-

reasonable withdrawal assessment. Congress’ decision to

structure MPPAA in this fashion was rationally related

to Congress’ legislative objectives, and should be upheld.

III. MPPAA’S EVIDENTIARY PRESUMPTIONS ARE

REBUTTABLE

CPP’s inability to marshall an adequate rebuttal in

this case does not establish that MPPAA’s evidentiary

presumptions may never be rebutted. To the contrary, —

case law applying the presumptions demonstrates that

actuarial calculations are subjected to careful scrutiny in

arbitration and litigation, and are rebutted where qir-

cumstances warrant. See, e.g., Huber, supra; see also

Sigmond Cohn Corp. and Machinists District No. 15

Pension Fund, 14 E.B.C. (BNA) 1031 (1991) (Sands,

Arb.) + Carnation Co., Inc. and Central States Pension

Fund, 9 E.B.C. (BNA) 1409 (1988) (Nagle, Arb.);

Casablanca Industries, Ine. and U.F.C.W. Local 23-Giant

13

Eagle Pension Fund, 7 EBC. (BNA) 2705 (1986)

(Jaffe, Arb.) ; Classie Coal Corp. v. U.M.W. 1950 and

1974 Pension Plans, 5 E.B.C. (BNA) 1449 (1984)

(Nagle, Arb.) :; Palmer Coking Coal Co. and U.M.W.

1950 and 1974 Pension Plans, 5 E.B.C. (BNA) 2369

(1984) (Gordon, Arb.) : Perkins Trucking Co. and Local

807 Pension Fund, 4 E.B.C. (BNA) 1489 (1983)

(O'Loughlin, Arb.)

As this Court has observed. “when Congress creates a

Statautory right, it clearly has the discretion, in defining

that right, to create presumptions, or assign burdens of

proof...” Northern Pipeline Construction Co. v. Mara-

thon Pipe Line Co., 458 U.S. 50, 83 (1982) ‘opinion of

Brennan, J.). The Court has also held that, “when it

comes to evidentiary rules in matters ‘not within spe-

cialized judicial competence or completely commonplace,’

it is primarily for Congress “to amass the stuff of actual

experience and cull conclusions from it.” Turner Elk-

horn, supra, 428 U.S. at 33-34, quoting United States v.

Gainey, 380 U.S. 63, 67 (1965).

Here, Congress has determined that the public interest

in ensuring stability in multi-employer pension plans is

best served by according evidentiary weight to the expert

calculations of plan actuaries through a rebuttable pre-

sumption of reasonableness. Contrary to CPP’s asser-

tions, the presumption has been and can be rebutted ef-

fectively where the circumstances warrant. The Academy

therefore urges the Court to affirm the constitutionality

of the MPPAA evidentiary presumptions.

14

CONCLUSION

For the forevoing reasons, the Academy respectfully

requests that the decision of the Court of Appeals below

be affirmed.

Respectfully submitted,

LAUREN M. BLooM

AMERICAN ACADEMY OF ACTUARIES

1720 Eye Street, N.W.

Washington, D.C. 20006

(202) 223-8196

Counsel of Record for the

September 11,1992 - American Academy of Actuaries